2. Threats to Coke’s model, SODA solutions
There are several long-term threats to Coke’s business model that are met, at least
partially, by acquiring and integrating Sodastream:
1. Obesity awareness is growing in the US and elsewhere, and colas are largely
considered a part of the problem. NY Mayor Bloomberg’s initiative to ban large
drinks may have been overturned by the court, but these kinds of initiatives reflect a
growing dissatisfaction with the sweet drink industry.
In coming years we can expect to see medical insurers acting to reduce consumption
of colas etc.
Soda + syrups, could be crafted to be significantly less obesity inducing, and
consumers would have considerably more control on consumption.
2. Sustainability: Sodastream is rattling Coke’s cage with its Coke-cage. Coke has already
threatened legal action.
Obviously, SodaStream massively reduces the environmental footprint of ‘coke
users’
1. Austerity: with unemployment and uncertainty dragging on for years, families and
companies alike continually look for ways to reduce costs. Cutting out sweet drinks is
an obvious low hanging fruit.
Coke+SodaStream can create and own the ‘home brew’ coke, which would be
chaeper than buying coke at Cosco etc.
4. - SODA currently has a market cap of $1B; presumably coke would pay approximately
50%-100% premium, or up to $2B. (Compare with KO’s $180B+ cap)
- KO can buy SODA easily from its $8B cash pile
- KO can distribute SODA globally; own a new business with the ‘syrup’ market
(everyone would buy the Real Thing, rather than a generic syrup); and make Pepsi
weep at the lost opportunity
- Coke is trying hard to get rid of its cash with dividends and over $2B in buybacks
per year; that would be great if Coke’s shares were cheap, but they’re at an all time
high
- here is an actual strategic initiative for a drinks company. opportunities like this will
arise only rarely!
